GSA challenges real estate developers with a 'once-in-a-several-lifetimes' opportunity

Friday - 12/21/2012, 5:19am EST

The General Services Administration is daring real estate developers to dream big by offering up two prime parcels of land in downtown Washington, D.C.

GSA released two requests for information earlier this month asking for industry's best ideas to redevelop, trade or find a way to improve how the FBI headquarters building and a parcel of land called Federal Triangle South are being used.

GSA acting administrator Dan Tangherlini said the agency will entertain any and all ideas to improve the office space and overall design of the areas, including suggestions for one building or all the buildings. He said GSA also wants to hear recommendations for retail, commercial, residential and definitely office space for about 14,000 federal employees.

Basically, GSA will accept anything that will reduce the costs to the government, make the office space more efficient and help transform the neighborhoods.

The Federal Triangle South area is made up of four federal buildings that house 12,000 workers. It's located along the Independence Avenue, S.W., area of Washington.

"Right now, the buildings that comprise this area represent a significant challenge and opportunity for GSA and the agencies that occupy them," Tangherlini said Thursday during a speech before the D.C. Building Industry Association at the National Press Club in Washington. "The Cotton Annex is empty and essentially abandoned. It's a very inefficient use of very valuable real estate in Washington, D.C. The GSA regional office building at Seventh and D Streets, S.W., is also inefficient and an unattractive space."

Need to better meet employees' needs

Tangherlini said at least 40 percent of staff is not in the GSA regional building because they are teleworking or meeting offsite.

"This space was not constructed with the modern realities of a mobile workplace in mind," Tangherlini said. "Its old cubicle farms make it the perfect poster child for everyone's negative stereotypes about what government offices look like. In fact, originally a warehouse, it is an example of a form of adaptive reuse that has done much to set back that approach to repurposing historic properties."

Dan Tangherlini, acting administrator, GSA

The Energy Department headquarters, the Federal Aviation Administration and the Homeland Security Department also are part of this area of D.C. Tangherlini said DoE's headquarters isn't meeting its employees' needs in many ways.

"Currently, this facility uses approximately 6,000 BTUs of energy per square foot more than the industry average. This occurs in a building with 1.8 million square feet of space. That is 10.8 billion BTUs of excess energy," he said. "That's enough energy to power almost 300 average U.S. households for an entire year. There is a certain irony to the Department of Energy working in a building that is that inefficient."

Tangherlini added the FAA buildings are the most modern of any of the buildings in the Federal Triangle South area. But even those offices need help.

"Last year, $20 million was invested into a single floor of the [the FAA's] Orville building to bring it up to the standards of a modern-day office," he said. "That kind of investment is not sustainable. We have to try something else."

Rare chance to change

And that's where the RFIs come in. Tangherlini said this is a once-in-a-several-lifetime opportunity to redevelop both of these prime real estate areas.

The Federal Triangle South is 21.5 acres, eight buildings, including the four federal offices and about 4 million square feet of space.

The FBI headquarters office isn't as large a parcel, but given its location on Pennsylvania Avenue between the White House and U.S. Capitol, it's a sought after location.

The office includes 2.4 million square feet of space on 6.6 acres.

The FBI currently can only house 52 percent of its headquarters staff in the building, with the rest spread out in other locations throughout the D.C. area.

Bill Dowd, GSA's acting Public Building Service Commissioner for the National Capital Region, said after Tangherlini's speech that with a better office layout, the FBI believes it can get one-third more people in 2.1 million square feet of office space.

"We know that the federal government owns some valuable assets, and we are looking to see if we can tap into that value to create not just high quality and high efficiency space for public servants, but real, lasting contributions to the neighborhoods where we work and live," Tangherlini said.

Industry has until Feb. 4 to respond to the Federal Triangle RFI. GSA extended the due date suggestions about the FBI building by a month to March 4.

Learning from experience

GSA's own experience with renovating its headquarters at 18th and F streets and moving into temporary space on Massachusetts Avenue is showing how other agencies could take better advantage of their office spaces.

Despite the fact that Congress pulled the funding plug on GSA's headquarters renovation, the agency still plans to bring nearly 6,000 employees into a building that used to house 3,000.

Tangherlini said GSA is changing the layout of its office space to get rid of single offices and move toward collaborative spaces. He said GSA is expecting to see the utilization rate of the offices in its headquarters building to increase to 80 percent from under 50 percent.

Tangherlini also said he just finished up a series of meetings with GSA employees who are moving back into 1800 F St., and found employees who actually like the current set up at the temporary space.

"I think 1800 F is exciting for what it represents in terms of the direction of space. But because of the vagaries of the appropriations process, it will actually represent kind of the whole transitions, almost three levels of space," he said. "Because we have the two phases of the project, you will be able to see the 'to be' state and then because we are doing a refresh for the part of the building that didn't get the full comprehensive renovation, you'll see kind of a progress toward that 'to-be' state that could be at any agency by taking out walls and using more collaborative furniture."

Tangherlini said GSA isn't getting rid of all its private offices, but most of the workers' areas will be open and promote collaboration.

"We will be able to walk people to kind of an evolution of utilization, a change in the way that we are doing work and get people to see it and associate it with it," he said. "We are hoping our employees can become sales people for this approach and help other agencies understand that the transition isn't so bad and the future is pretty good."

Real estate challenges

GSA has struggled over the last few years with its real estate management. For that reason, getting industry involved early in the FBI and Federal Triangle South projects is a good sign, industry experts say.

Darian LeBlanc, an executive managing director and a principal at Cassidy Turley, a commercial real estate development firm that does business with the government, said GSA over the past few years hasn't interacted with industry as soon as possible and that has caused some unneeded challenges for both sides.

LeBlanc wasn't directly commenting on GSA's most recent RFIs, but he offered a broad perspective of the agency's approach over the last few years.

"It has led to probably a less than thorough analysis and less than thorough decisions. It ultimately costs the government money when they are not timely in terms of dealing with specific requirements," LeBlanc said. "These things can and typically get initiated four or five years in advance of a specific need. But, more recently, we've been seeing the government allow expiring leases and needs come up where they're being done sometimes within a year of when the actual need arises. In some cases with existing leases, we are seeing contracts go into holdover for extended periods of time until the government figures out what's in their best interest to do."

Budget uncertainties having an effect

He said the federal real estate world has been tough over the past few years, partially because of how closely agencies and Congress are looking at their budgets, and partially because agencies are struggling to plan their office space and their employees' needs because of the budget uncertainties.

In fact, GSA's own turmoil over the last year, with the head of the Public Buildings Service resigning and a new one coming in, has added to the challenges, LeBlanc said.

"All of those issues have conspired to make the federal real estate environment, I've never seen it more difficult and I've never seen the GSA struggle so much with their planning and their ability to execute on real estate transactions," he said.

LeBlanc added if GSA offered more speed and more transparency in its decision-making process, it would help industry greatly.

Tangherlini said industry's input and innovative ideas will make this project move forward.

"Working together with industry, we believe that we can redevelop the underutilized and outdated properties at Federal Triangle South to create a mixed-use neighborhood that will connect the National Mall to the Southwest Waterfront," he said. "We believe we can both provide for the 21st century space needs of federal employees and create a place in which people will want to work, live, play and learn. We can replace the cold, sterile, utilitarian, single-use enclave with a vibrant, diverse and special community of its own."

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